STI Rebounds 5.2% in July, led by Seatrium & Keppel Corp

• The 5.2% gain on the month was the STI’s strongest performing month since a 6.4% gain in November 2022, with the STI trading at March levels (below 3,150) in early July, then retesting February levels (above 3,350) in late July. This brings the STI’s total return over the first seven months of 2023 to 6.5%.
• Going into July, broad market sentiment was weighed by the potential impact of decelerating growth on corporate earnings and outlooks. However, the earnings season thus far has seen more upside surprises than downside surprises, in the US, across ASEAN and in Singapore. August is a particularly important month for 1HFY23 reporting in Singapore.
• Seatrium led the STI constituents in July, gaining 12.8% while booking the highest net institutional inflow for the month at S$75.4 million. Keppel Corp was the STI’s second strongest performer in July and reported its highest profit on record in its 55-year history which was underpinned by the S$3.3 billion disposal gain from the divestment of the O&M business.

The STI’s 5.2% gain in July to 3,373.98 marked the Singapore benchmark’s strongest performing month since lodging a 6.4% gain in November 2022. The month saw the STI test at March levels (below 3,150) in early July, then retest February levels (above 3,350) in late July. Comparative Index returns for July in SGD terms are tabled below which take into account the USD/SGD depreciation of 1.7% to 1.33 over the month.

The three banks began July with a combined 44.7% weight in the STI and a 45.5% weight in the MSCI Singapore Index. The trio averaged 8.2% gains on the month. UOB reported its 2QFY22 Net Interest Income grew 31% YoY, while other non-interest income rose sharply on higher customer-related treasury income and strong performance from trading and liquidity management activities.

Going into July, the impact of decelerating growth on broader corporate earnings and 2H23 outlooks was a growing concern, however the earnings season thus far has seen more upside surprises than downside surprises, in the US, across ASEAN and in Singapore. The next three weeks will be particularly important for 1HFY23 reporting in Singapore, as the local earnings season presses on. DBS Group Holdings will report on 3 August and Oversea-Chinese Banking Corporation reports on 5 August.

For the month. the Singapore stock market booked net institutional outflow in the vicinity of S$220 million, bringing the total net institutional outflow for the past seven months to S$2.9 billion. In July, the number of stocks that booked net institutional outflow was fairly level with the number of stocks that booked net institutional inflow.

Seatrium Led STI Stocks in July, followed by Keppel Corporation

Seatrium led the STI constituents over the month with a 12.8% price gain with S$75.4 million of net institutional inflow. During the month, the newest STI addition announced it had secured a Green Trade Finance Facility from OCBC worth an estimated S$1.04 billion. Seatrium reported revenue of S$2.9 billion for 1HFY23, and while it still reported a net loss in 1HFY23, management noted key measures are being worked on to steer the Group back to net profitability which includes the streamlining of the Group’s cost structure and the completion of the ongoing capital restructuring. Seatrium’s acting group finance director said the company’s financial results “reflect the completion” of its combination with Keppel O&M, now known as Seatrium O&M and without the provisions for those expenses, its net loss for the period would have been S$33 million, rather than the reported S$264 million attributable net loss. Seatrium secured S$4.3 billion of new orders in 1HFY23, bringing its net order book to over S$19 billion (Including two of three contracts for the supply of the HVDC systems for TenneT) with deliveries till 2030. Renewables and cleaner/green solutions comprise approximately 40% of this net order book.

Keppel Corporation was the STI second strongest performer in July and reported its highest profit on record in the Company’s 55-year history which was underpinned by the S$3.3 billion disposal gain from the divestment of the O&M business. Real Estate Developers, in addition to Banks. were also among the strongest performing global sectors in July, coinciding with City Developments and UOL Group ranking as the STI’s third and fourth strongest stocks for the month, and DBS Group Holdings ranking as the fifth strongest performer on the month.

Global expectations are currently anchored to July’s US Fed Funds Rate (FFR) hike to 5.25% to 5.50% being the last hike for the current tightening cycle. There is still some 30% of the market expecting that the Fed Funds Rate will be 25bps higher going into 2024 and all four of the incoming FOMC 2024 voters, Tom Barkin, Raphael Bostic, Mary Daly, and Loretta Mester acknowledged in July that US inflation was still too high. The PCE Core Deflator returned to 4.1% in June 2023 from 4.6% in May, which is the lowest level since 3.9% in Sep 2021, however there is still much ground to cover before the gauge returns to previous 2.1% highs seen in 2018. The current hypothesis of the Fed doves is that the full impact of past hikes is yet to be realised on inflation and given the Fed’s sub-mandate of being data dependent, the FFR is potentially at its peak.  

The least performing STI constituent for the month was Hongkong Land which reported that while its 1HFY23 underlying profit was in line with 1HFY22, there was a loss attributable to shareholders of US$333 million in 1HFY23, compared to a profit of US$292 million in 1HFY22. Management noted that the figure reflected unrealised losses mainly arising from Investment Properties revaluations of US$755 million and US$133 million in 1HFY23 and 1HFY22, respectively with the 2023 revaluation loss principally attributable to the Hong Kong office portfolio following a modest decrease in market rents and a slight cap rate expansion.

The 30 STI stocks are tabled below and ranked by performances in July.

STI Stocks	Code	Mkt Cap S$M	YTD Avg Daily Turnover S$M	YTD Net Insti. Flow S$M	YTD Total Return %	July Net Insti. Flow S$M	July Price Change %	P/B (x)	5 Year Avg P/B (x)	Ind Div Yield %
Seatrium	S51	9,621	43.2	132.6	2.2	75.4	12.8	1.2	0.9	0.0
Keppel Corp	BN4	13,005	29.2	-172.1	60.6	-15.1	10.0	1.2	0.7	4.6
CityDev	C09	6,702	13.5	-133.8	-8.1	13.4	10.0	0.7	0.7	1.1
UOL	U14	5,939	7.3	11.1	7.3	8.6	9.5	0.6	0.6	2.2
DBS	D05	88,360	133.8	-1,328.1	5.2	31.3	8.7	1.5	1.3	4.6
SATS	S58	4,173	16.5	-57.9	4.3	8.1	8.5	1.8	2.8	0.0
OCBC Bank	O39	59,782	62.2	-113.5	12.8	5.3	8.3	1.1	1.0	5.1
UOB	U11	50,390	89.5	-840.6	0.7	-151.3	7.5	1.1	1.1	5.4
CapLand IntCom T	C38U	13,569	37.0	-93.6	2.6	9.3	6.8	1.0	1.1	5.2
Singtel	Z74	43,918	50.6	-170.5	3.5	32.4	6.4	1.7	1.6	3.7
SIA	C6L	22,396	47.4	111.0	36.2	-2.7	5.3	1.1	0.8	5.0
Mapletree Log Tr	M44U	8,354	23.9	-7.0	9.2	-3.4	4.3	1.1	1.3	5.0
ThaiBev	Y92	15,200	16.5	-47.0	-8.5	10.1	4.3	2.1	3.0	4.0
CapLand Ascendas REIT	A17U	12,337	31.5	-43.4	7.8	-14.3	3.3	1.2	1.3	4.9
CapitaLandInvest	9CI	17,414	24.8	-90.3	-3.6	-35.5	2.7	1.1	1.2	3.6
YZJ Shipbldg SGD	BS6	6,084	33.9	-13.4	17.9	3.0	2.7	1.9	0.6	3.3
Mapletree PanAsia Com Tr	N2IU	8,652	15.8	-62.5	1.4	-22.8	1.9	0.9	1.1	5.7
Venture	V03	4,359	15.2	-98.7	-9.4	-19.5	1.8	1.5	2.0	5.1
Wilmar Intl	F34	24,097	23.3	15.0	-4.9	9.1	1.6	0.9	1.1	4.4
ST Engineering	S63	11,627	15.9	35.2	13.8	-9.2	1.4	4.8	5.2	4.3
Mapletree Ind Tr	ME8U	6,344	10.3	-31.5	4.9	-7.0	1.4	1.1	1.5	5.9
SGX	S68	10,370	16.7	68.6	10.4	-8.5	1.0	7.0	7.9	3.3
Genting Sing	G13	11,348	32.9	101.7	0.3	-37.4	0.0	1.4	1.3	3.2
Jardine C&C	C07	13,549	12.9	4.6	24.0	-8.3	-1.5	1.3	1.2	4.4
Emperador Inc.	EMI	8,026	0.8	-0.7	1.4	-2.6	-1.9	3.6	2.8	1.4
Frasers L&C Tr	BUOU	4,542	11.8	-20.6	8.1	-22.8	-2.4	1.0	1.2	5.8
DFIRG USD	D01	4,841	1.8	15.7	-8.3	-1.4	-3.9	3.8	5.7	1.8
JMH USD	J36	19,025	18.1	-12.4	-0.5	-11.3	-4.2	0.5	0.7	4.3
Sembcorp Ind	U96	9,733	21.9	151.4	64.3	-18.5	-5.2	2.4	0.8	1.4
HongkongLand USD	H78	10,483	10.5	-40.1	-20.3	-27.9	-10.3	0.2	0.3	6.1

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Originally Posted August 1, 2023 – STI Rebounds 5.2% in July, led by Seatrium & Keppel Corp